Libraries respond to Penguin, and it’s not pretty

Fallout continues over Penguin’s decision to terminate its contract with library ebook distributor OverDrive — an action that meant its ebooks would not be available for libraries.

As we noted in our earlier report, Penguin has some legitimate concerns — for example, as Michael Kelly described in in a Library Journalreport, there’s the concern …

… that if library loans become too “frictionless,” in other words, do not involve a physical trip to the library to borrow and return a book, that it will eat into their sales.

The desire to increase this friction may lead the recalcitrant publishers to demand a business model in which they will only make their ebooks available to public libraries if they are used in the library or if a patron is required to bring their device to the library and load the title onto the device in the library, then bring it home.

But the timing of the announcement — coming right after Random House had announced a deal with libraries for unrestricted lending, and right after meetings with American Library Association executives — made it seem something adversarial, and deliberately so.

Reaction amongst librarians was swift, and emphatic. Sarah Houghton, Director of California’s San Rafael Public Library, posted a sign in her library (see photo right), which she also made available for anyone to download on Google Docs, identifying not only Penguin but all the major publishers who, as a statement on the library’s website put it, “currently refuse to sell or license eBooks to libraries” — including names and phone numbers of people to contact at each one.

“I think it’s about damn time we, as library professionals, started getting the public riled up about this,” Houghton explains in a post on her personal blog, Librarian in Black. “I am tired of publishers walking away from the library table.”

Well, Penguin would counter that, as it said in its announcement, it actually plans to keep negotiating, but there’s no denying that the optimistic mood in the wake of the Random House announcement has vaporized. As a report by Steve Woods at Technorati puts it, “It feels too much like we’re all beginning to break up way too early in this new relationship …”

At INFOdocket, Gary D. Price offers some insight in this post about another reason Penguin may have done what it did — and it has something to do with you-know-who:

We are told that publisher contracts with OverDrive allow them to store and serve library end users ebooks. That’s it.

OverDrive does NOT have permission to first authorize the lending of an ebook to a library end user and then forward the request for actual distribution and tracking of the title to Amazon.com or ANY other retailer. Similarly, in most situations*, publishers do not permit retailers to lend ebooks directly to end users.

Penguin has subsequently been informed by Amazon that it had not been consulted by Overdrive about the terms of Penguin’s agreement with Overdrive.

You have to wonder what did OverDrive tell publishing partners about how Kindle lending would work? What didn’t they tell them?

In another INFOdocket post, Price expounds on this, reprinting the email notice Overdrive sent to its partners, and noting that it says Penguin’s move “means Penguin eBooks will no longer be available for over-the-air delivery to Kindle devices or to Kindle apps.”

Says Price,

The end of over-the-air downloads to Kindle devices is interesting. Does it say something about a security issue in Amazon’s wireless download system? Something else? How about trying to make things a bit tougher for library users/OverDrive customers that will slowdown loans OR simply OverDrive and Amazon now following the Penguin’s contract?

In November Penguin said that Amazon.com was never told about the terms of the Penguin/OverDrive contract. Perhaps it said that wireless downloading was not permitted?

Otherwise, perhaps it’s some form of retribution directed at OverDrive with Amazon.com or maybe we’ve watched to many reruns of The Soprano’s.

Penguin says that it will continue negotiating with the ALA and that it will do so with good will, and there’s every reason to believe them. The bad press isn’t doing Penguin any good, and the company didn’t get to where it is by being stupid — it’s not only good business to sell books to libraries and develop new generations of readers, but most people at Penguin, as in most of publishing, grew up in libraries and see them as true partners to the cause.

Still, given the speculation as to the company’s reasoning for doing what it did, and the quick response of the library community, it’s a safe bet that whatever develops isn’t going to be quite as “frictionless” as Penguin had hoped.

Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House.

11 Comments

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but most people at Penguin, as in most of publishing, grew up in libraries and see them as true partners to the cause…

You are kidding right?

I forget what executive at what major publishing house ( I remember it was one of the big six) said last year that “libraries had been a thorn in the publishing industries side for almost a hundred years and he did not give a damn about the public library system”.

Its all very well to channel warm fuzzy words about big business but the fact remains that 99% of those words belong in a well known section of the library called the “Fantasy” section.

No matter what Penguin wants, they either provide what the customers want (in this case the librarians. their funders, and their customers), or they lose the most valuable source of pre-qualified leads that a publishing company can have…the millions of people who read books through their library system and then who go on to purchase books in support of their favorite authors.

At this point I’d suggest that the majority of authors should break their contracts and leave their publishers and go it with a friendly editor. The loss of sales due to lack of commercial promotion would probably be offset but the higher commissions earned over time by the majority of the authors who left.

Either way it is good news that this is a hissy fight between publishers and Amazon and not a step away from the essential lending process. Although I think that eventually publishers will come to see Amazon as their number one retailer. Imagine just how many books would remain unsold if Amazon stepped up and said they would not carry a publishers works because of animosity between the companies.

No matter what you think of Amazon’s business practices, you have to admit they have the keys to the purses and eyeballs of tens of millions of customers and have an incredible insight of what it takes to get the digital consumer to part with his money in exchange for content.

Excellent explanation of the current state of affairs. I work in a library–on the front lines, so to speak, and this will help me explain to our patrons why it’s so difficult to borrow a ebook compared to the ease of purchasing one. Euphemism of the day: friction.

as a small publisher i cannot afford to lose any sales and stay in biz.

i would like libraries to buy a lot of my content but realise that all the books they buy reduces the other sales.

still not clear what is the best balance of making a profit while providing some public benefit by selling a few books to libraries, versus making more profit and not selling any to libraries (but hopefully not losing my shirt when i do not sell to libraries at all).

or losing money when i sell too many to libraries — depending on number of books bought by libraries and how often they lend them.

if libraries would guarantee a large initial sale then i would gladly sell all they want. can’t afford to sell only a few which is just enough to guarantee a loss when they destroy the sales to individual people.

I want to support publishers and authors, but love the convenience and reduced expense of the library. Give me a library model where they charge me, for example, fifty cents up front to borrow an ebook for two weeks. It’s a nominal fee from my pocket that doesn’t hit hard, and the libraries and publishers should split the receipts so both are well-supported.

I still purchase books from favorite authors so I always have them on hand, but discovering those authors via the library is the driving force.

Are you sure you will be loosing sales by selling to libraries? The radio station model of playing the music free to increase sales of vinyl and CDs had worked well for the music industry for decades, despite the fear of the end of music sales (initially concerts, later of albums).

Perhaps the issue is your books are not in the proper format – such as reference material, links to web, hardcover vs. softcover, updates or whatever would create value for someone to add a book to ones personal library after verifying that it is valuable.

If I love a book I borrow from the library, I buy it. I have purchased many (my shelves groan) books this way. I don’t pay attention to hype in any form, including awards or best-seller status. Such factors have everything to do with dollars invested in concept or celebrity status and nothing to do with literary quality or, more specifically, my own taste. I know I am not alone in this.

People getting books from library are valuable customers: they read a lot and talk about books they read around them. You should add in your business equation that it helps to market (good) books for no cost. This is really true when your marketing budget is tiny.

I think we’ve all acknowledged the importance of libraries for this. But as to the “business equation,” I’m not sure what you’re saying has “no cost.” It does indeed have cost, which is what this particular discussion is all about. — Dennis Johnson